Columbus, Ohio: The Justice Department has asked a federal court to permanently bar prepare John Allen from promoting tax-fraud schemes and preparing federal tax returns. In its complaint, the DOJ alleges that Allen, who does business as Allen & Associates, promotes several schemes involving the preparation of fraudulent federal income tax returns based on the false premise that his customers do not receive “wages” as defined by law.
The complaint alleges that Allen has promoted at least three tax-fraud schemes, moving from scheme to scheme when the IRS identifies the bogus nature of the returns filed. The complaint alleges that as part of the promotion, Allen prepares his customers’ returns, but does not sign the returns as the preparer. According to the complaint, Allen prepares frivolous letters addressed to the Secretary of the Treasury and the commissioner of the IRS on behalf of customers, and also aided a customer in an attempt to file a frivolous lien against the U.S. by preparing a bogus lien document and directing his customer to file it. Allen allegedly solicits up-front fees of $250 from customers to prepare their returns and handle any correspondence with the IRS, and asks for a “donation” of 10 percent of any refund issued to his customers by the IRS.
The complaint further alleges that Allen falsely holds himself out as an attorney to his customers and to third parties, including the IRS, despite being enjoined from the unauthorized practice of law by the Supreme Court of Ohio.
Bristol, Va.: The United States has sued to bar Charles Sewell of Bristol, Va., from promoting an alleged scheme involving fraudulent tax refund claims, the Justice Department said. According to the government’s amended complaint, Sewell creates fraudulent types of 1099s for other taxpayers and files them with the IRS. The forms are allegedly designed to help Sewell’s customers request large refunds based on false claims of income earned and federal tax withheld.
The complaint alleges that Sewell’s scheme is based on the “commercial redemption” theory, in which individuals make refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS. The lawsuit alleges that Sewell’s customers sought $67 million in bogus refunds.
Vernon Hills, Ill.: The Department of Justice reported that CPA and preparer Jeffrey B. Travis has pleaded guilty to bank fraud involved in a scheme to defraud US Bankcorp and five of his clients of more than $1.8 million. Travis, who does business as Gross & Travis Ltd., and Travis and Associates Inc., with offices in Deerfield, admitted that he engaged in the fraud from at least May 2002 until December 2008, in which he prepared checks payable from his clients to vendors, retirement programs and tax authorities. Instead of delivering the funds to the payees intended by his clients, prosecutors claimed, he deposited hundreds of such checks without authority into accounts he controlled at US Bank, at times altering the checks to increase the amounts paid. Travis then withdrew the money from those accounts and diverted the funds, gathering more than $1.8 million over the course of the scheme for his own use. Bank fraud carries a maximum penalty of 30 years in prison, a $1 million fine and mandatory restitution.
Travis, 51, is free on bond while awaiting sentencing, which is scheduled for Feb. 5, 2013. As a condition of bond, Travis must notify his clients of the charge against him.